§ 78p. — Directors, officers, and principal stockholders.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC78p]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2B--SECURITIES EXCHANGES
Sec. 78p. Directors, officers, and principal stockholders
(a) Disclosures required
(1) Directors, officers, and principal stockholders required
to file
Every person who is directly or indirectly the beneficial owner
of more than 10 percent of any class of any equity security (other
than an exempted security) which is registered pursuant to section
78l of this title, or who is a director or an officer of the issuer
of such security, shall file the statements required by this
subsection with the Commission (and, if such security is registered
on a national securities exchange, also with the exchange).
(2) Time of filing
The statements required by this subsection shall be filed--
(A) at the time of the registration of such security on a
national securities exchange or by the effective date of a
registration statement filed pursuant to section 78l(g) of this
title;
(B) within 10 days after he or she becomes such beneficial
owner, director, or officer;
(C) if there has been a change in such ownership, or if such
person shall have purchased or sold a security-based swap
agreement (as defined in section 206(b) \1\ of the Gramm-Leach-
Bliley Act (15 U.S.C. 78c note)) involving such equity security,
before the end of the second business day following the day on
which the subject transaction has been executed, or at such
other time as the Commission shall establish, by rule, in any
case in which the Commission determines that such 2-day period
is not feasible.
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\1\ See References in Text note below.
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(3) Contents of statements
A statement filed--
(A) under subparagraph (A) or (B) of paragraph (2) shall
contain a statement of the amount of all equity securities of
such issuer of which the filing person is the beneficial owner;
and
(B) under subparagraph (C) of such paragraph shall indicate
ownership by the filing person at the date of filing, any such
changes in such ownership, and such purchases and sales of the
security-based swap agreements as have occurred since the most
recent such filing under such subparagraph.
(4) Electronic filing and availability
Beginning not later than 1 year after July 30, 2002--
(A) a statement filed under subparagraph (C) of paragraph
(2) shall be filed electronically;
(B) the Commission shall provide each such statement on a
publicly accessible Internet site not later than the end of the
business day following that filing; and
(C) the issuer (if the issuer maintains a corporate website)
shall provide that statement on that corporate website, not
later than the end of the business day following that filing.
(b) Profits from purchase and sale of security within six months
For the purpose of preventing the unfair use of information which
may have been obtained by such beneficial owner, director, or officer by
reason of his relationship to the issuer, any profit realized by him
from any purchase and sale, or any sale and purchase, of any equity
security of such issuer (other than an exempted security) or a security-
based swap agreement (as defined in section 206B of the Gramm-Leach-
Bliley Act) involving any such equity security within any period of less
than six months, unless such security or security-based swap agreement
was acquired in good faith in connection with a debt previously
contracted, shall inure to and be recoverable by the issuer,
irrespective of any intention on the part of such beneficial owner,
director, or officer in entering into such transaction of holding the
security or security-based swap agreement purchased or of not
repurchasing the security or security-based swap agreement sold for a
period exceeding six months. Suit to recover such profit may be
instituted at law or in equity in any court of competent jurisdiction by
the issuer, or by the owner of any security of the issuer in the name
and in behalf of the issuer if the issuer shall fail or refuse to bring
such suit within sixty days after request or shall fail diligently to
prosecute the same thereafter; but no such suit shall be brought more
than two years after the date such profit was realized. This subsection
shall not be construed to cover any transaction where such beneficial
owner was not such both at the time of the purchase and sale, or the
sale and purchase, of the security or security-based swap agreement (as
defined in section 206B of the Gramm-Leach-Bliley Act) involved, or any
transaction or transactions which the Commission by rules and
regulations may exempt as not comprehended within the purpose of this
subsection.
(c) Conditions for sale of security by beneficial owner, director, or
officer
It shall be unlawful for any such beneficial owner, director, or
officer, directly or indirectly, to sell any equity security of such
issuer (other than an exempted security), if the person selling the
security or his principal (1) does not own the security sold, or (2) if
owning the security, does not deliver it against such sale within twenty
days thereafter, or does not within five days after such sale deposit it
in the mails or other usual channels of transportation; but no person
shall be deemed to have violated this subsection if he proves that
notwithstanding the exercise of good faith he was unable to make such
delivery or deposit within such time, or that to do so would cause undue
inconvenience or expense.
(d) Securities held in investment account, transactions in ordinary
course of business, and establishment of primary or secondary
market
The provisions of subsection (b) of this section shall not apply to
any purchase and sale, or sale and purchase, and the provisions of
subsection (c) of this section shall not apply to any sale, of an equity
security not then or theretofore held by him in an investment account,
by a dealer in the ordinary course of his business and incident to the
establishment or maintenance by him of a primary or secondary market
(otherwise than on a national securities exchange or an exchange
exempted from registration under section 78e of this title) for such
security. The Commission may, by such rules and regulations as it deems
necessary or appropriate in the public interest, define and prescribe
terms and conditions with respect to securities held in an investment
account and transactions made in the ordinary course of business and
incident to the establishment or maintenance of a primary or secondary
market.
(e) Application of section to foreign or domestic arbitrage transactions
The provisions of this section shall not apply to foreign or
domestic arbitrage transactions unless made in contravention of such
rules and regulations as the Commission may adopt in order to carry out
the purposes of this section.
(f) Treatment of transactions in security futures products
The provisions of this section shall apply to ownership of and
transactions in security futures products.
(g) Limitation on Commission authority
The authority of the Commission under this section with respect to
security-based swap agreements (as defined in section 206B of the Gramm-
Leach-Bliley Act) shall be subject to the restrictions and limitations
of section 78c-1(b) of this title.
(June 6, 1934, ch. 404, title I, Sec. 16, 48 Stat. 896; Pub. L. 88-467,
Sec. 8, Aug. 20, 1964, 78 Stat. 579; Pub. L. 106-554, Sec. 1(a)(5)
[title II, Sec. 208(b)(3), title III, Sec. 303(g), (h)], Dec. 21, 2000,
114 Stat. 2763, 2763A-435, 2763A-455, 2763A-456; Pub. L. 107-204, title
IV, Sec. 403(a), July 30, 2002, 116 Stat. 788.)
References in Text
Section 206(b) of the Gramm-Leach-Bliley Act, referred to in subsec.
(a)(2)(C), probably means section 206B of Pub. L. 106-102, which is set
out in a note under section 78c of this title.
Section 206B of the Gramm-Leach-Bliley Act, referred to in subsecs.
(b) and (g), is section 206B of Pub. L. 106-102, which is set out in a
note under section 78c of this title.
Amendments
2002--Pub. L. 107-204 reenacted section catchline without change,
added heading and text of subsec. (a), and struck out former subsec. (a)
which read as follows: ``Every person who is directly or indirectly the
beneficial owner of more than 10 per centum of any class of any equity
security (other than an exempted security) which is registered pursuant
to section 78l of this title, or who is a director or an officer of the
issuer of such security, shall file, at the time of the registration of
such security on a national securities exchange or by the effective date
of a registration statement filed pursuant to section 78l(g) of this
title, or within ten days after he becomes such beneficial owner,
director, or officer, a statement with the Commission (and, if such
security is registered on a national securities exchange, also with the
exchange) of the amount of all equity securities of such issuer of which
he is the beneficial owner, and within ten days after the close of each
calendar month thereafter, if there has been a change in such ownership
or if such person shall have purchased or sold a security-based swap
agreement (as defined in section 206B of the Gramm-Leach-Bliley Act)
involving such equity security during such month, shall file with the
Commission (and if such security is registered on a national securities
exchange, shall also file with the exchange), a statement indicating his
ownership at the close of the calendar month and such changes in his
ownership and such purchases and sales of such security-based swap
agreements as have occurred during such calendar month.''
2000--Subsecs. (a), (b). Pub. L. 106-554, Sec. 1(a)(5) [title III,
Sec. 303(g)], amended subsecs. (a) and (b) generally, revising
provisions to extend application to security-based swap agreements.
Subsec. (f). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 208(b)(3)], added subsec. (f).
Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec. 303(h)],
added subsec. (g).
1964--Subsec. (a). Pub. L. 88-467, Sec. 8(a), substituted
``registered pursuant to section 78l of this title'' for ``registered on
a national securities exchange'', ``Commission (and, if such security is
registered on a national securities exchange, also with the exchange)''
for ``exchange (and a duplicate original thereof with the Commission)'',
``a change'' for ``any change'', and ``Commission (and if such security
is registered on a national securities exchange, shall also file with
the exchange) a statement'' for ``exchange a statement (and a duplicate
original thereof with the Commission)'', and inserted ``on a national
securities exchange or by the effective date of a registration statement
filed pursuant to section 78l(g) of this title'' after ``registration of
such security''.
Subsecs. (d), (e). Pub. L. 88-467, Sec. 8(b), added subsec. (d) and
redesignated former subsec. (d) as (e).
Effective Date of 2002 Amendment
Pub. L. 107-204, title IV, Sec. 403(b), July 30, 2002, 116 Stat.
789, provided that: ``The amendment made by this section [amending this
section] shall be effective 30 days after the date of the enactment of
this Act [July 30, 2002].''
Effective Date of 1964 Amendment
Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section 13
of Pub. L. 88-467, set out as a note under section 78c of this title.
Transfer of Functions
For transfer of functions of Securities and Exchange Commission,
with certain exceptions, to Chairman of such Commission, see Reorg. Plan
No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat.
1265, set out under section 78d of this title.
Section Referred to in Other Sections
This section is referred to in sections 78c, 78c-1, 78j, 78l, 78hh,
79q of this title; title 26 section 83.
